Donskoy Tabak (DT), Russia's fourth-largest cigarette manufacturer and its Greek subsidiary SEKAP, owned by Greek-Russian businessman and investor Ivan Savvidis, has been sold to Japan Tobacco (JT) the latter announced in a statement on Friday.

The purchase price for the transaction is estimated at around RUB 90 billion (USD 1.6 billion).The acquisition will strengthen JT’s leading position in the Russian cigarette market, the third-largest in the world, the Japanese tobacco giant said.

JT has been on the hunt for deals seeking to boost its presence in emerging markets as sales in Japan shrink. According to news reports it has spent $2 billion on acquisitions last year in Asia.

One of the world's biggest tobacco companies, whose global brands include Winston and Camel, JT said on Friday that Donskoy Tabak would increase its Russian market share to 40 percent and add to profits immediately with synergies expected in the following years,

“Throughout 2017 we have restored our market share in Russia, driven by the success of our Global Flagship Brands, Winston and LD. With DT’s value brands complementing our existing product portfolio and its strong salesforce expanding our distribution network, we will strengthen our overall competitiveness in the country,” said Eddy Pirard, JTI’s President and CEO.

In December, 2017, SEKAP nearly closed because it said it could not pay a fine for 2009 customs violations totalling 44 million euros with surcharges, which date to a period prior to its acquisition by Savvidis. Earlier this month, a local court in the city of Komotini, Greece issued an injunction against the execution of the fine, pending a final court decision on the case.

In a brief statement by Savvidis towards the Greek company's workforce, he said the reason for selling his share in SEKAP was the decline in market sales due to the economic crisis, as well as "significant increases" in special consumer taxes.

The transaction is expected to be completed by the beginning of the third quarter of the fiscal year 2018 pending regulatory clearance.

JT, DT and SEKAP part of a new family

Japan Tobacco was founded in 1949 as Japan Tobacco and Salt Public Corporation and in 1985 as a public company. It is headquartered in Tokyo and is part of the Nikkei 225 index. Japan Tobacco International's headquarters are in Geneva, Switzerland. JT Group operates in over 70 countries and have products sold in more than 120 countries. As of December 31, 2016 it has 44,667 employees. (Consolidated)

CJSC Donskoy Tabakwas founded in 1857 and is based in Rostov-on-Don, Russia. It manufactures and sells tobacco and cigarette products in Russia and internationally. Offices and subdivisions of the company are operating in 78 cities in Russia.

SEKAP SA, the Greek Tobacco Industry of Xanthi, was founded in 1975. The company is active in the production, distribution and trade of cigarettes and tobacco products in Greece and internationally. In 2013, SEKAP was acquired by DT and in July of the same year came under Savvidis's ownership in a privatisation deal.

Ivan Savvidis, a businessman, politician and philantropist

Ivan Savvidis was born in 1959 in Georgia. After serving in the Soviet Army, Savvidis graduated from the logistic faculty of Rostov State University of Economics in Russia. During the 1980s and 1990s, he was employed at the Don State Tobacco Factory. In 1998 he kicked off his political career and later on he became a member of the Russian Parliament.

He is the Chairman of the Board of Directors of the “Agrocom Group” located in Rostov-on-Don which incorporates more than 40 enterprises. He is also the owner of a series of companies in Greece. Savvidis is an outstanding philanthropist. He is married and has two sons. In 2013, Forbes listed him as the 30th wealthiest Russian businessman in the world.

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